Local authorities must pursue a housing transformation policy, by increasing the number of units, for example, but reducing their size, according to ING’s second study on “the housing challenge for municipalities”.
Are demographic pressure and the price of real estate in a district linked? This is the question ING Bank economists set out to answer by analysing income and property prices in the country’s 589 municipalities between 2005 and 2014. And, inevitably, the answer is puzzling … No, property prices and demographic pressure are not always linked.
Similarly, municipalities whose population has increased significantly “are not all characterised by a bigger rise in property prices.” Examples of this are Charleroi and Ciney: while the population of the capital of the Condroz has increased by 11%, the largest city in Wallonia has lost 3% of its population. Both, however, experienced a rise in prices of 44%.
On the other hand, the study sends a clear message to municipal authorities. In particular, it highlights that only an active policy of transforming existing housing into smaller units can “improve accessibility by drastically increasing the supply“. Regulation by quantity seems more appropriate than regulation by price.
Improving the offer
“Choosing whether or not to foster projects of interest to investors is a political decision where a balance between better access to housing and better access to property must be found,” says Philippe Ledent, economist at ING. “There is no point in using gimmicks to try to bridge the gap that has widened between prospective buyers’ borrowing capacity and housing prices, as this only keeps up the pressure on prices.”
The ING study also shows that the ageing of the population should however encourage local authorities to “orient their housing policy towards meeting this demand“, again through the transformation of existing housing into smaller units and innovative planning solutions adapted to an ageing population.